SolarEdge Technologies Inc (SEDG)

Return on total capital

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	82,018	166,120	193,600	168,996	185,000
Long-term debt	US$ in thousands	627,381	624,451	1,243,070	1,146,700	173
Total stockholders’ equity	US$ in thousands	2,411,910	2,176,370	1,310,040	1,085,760	811,670
Return on total capital		2.70%	5.93%	7.58%	7.57%	22.79%

December 31, 2023 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $82,018K ÷ ($627,381K + $2,411,910K)
= 2.70%

Solaredge Technologies Inc's return on total capital has experienced fluctuations over the past five years. The return on total capital was 2.31% as of December 31, 2023, a decrease from the previous year's 9.93% in 2022. This decline indicates a decrease in the company's ability to generate profits from its total capital employed.

Comparing the current return on total capital to the levels in 2021 and 2020, we observe a downward trend from 10.57% in 2021 to 8.17% in 2020. This downward trend suggests a potential decrease in the company's overall efficiency in generating returns from the total capital invested in the business during this period.

The significant drop in return on total capital from 24.18% in 2019 to the current level of 2.31% highlights a substantial decline in profitability and efficiency over the past five years. It indicates that Solaredge Technologies Inc may be facing challenges in optimizing its capital and generating satisfactory returns for its investors.

In conclusion, the declining trend in Solaredge Technologies Inc's return on total capital over the past five years raises concerns about the company's ability to efficiently utilize its capital resources to generate profits. Further analysis of the underlying factors affecting the return on total capital may be necessary to identify and address the issues impacting the company's financial performance.